Practice Questions: Indian Regulatory Framework | Business Laws for CA Foundation PDF Download

Q1: Briefly describe about the following Regulatory bodies of the Government of India:

(i) Securities and Exchange Board of India
(ii) Reserve Bank of India
(iii) Insolvency and Bankruptcy Board of India
Marks: 6

Answer: (i) Securities and Exchange Board of India:
• It is the regulatory body for securities and the commodity market in India under the ownership of the Ministry of Finance within the Government of India.
• It was established on 12 April, 1988 as an executive body and was given statutory powers on 30 January, 1992 through the SEBI Act, 1992.

(ii) Reserve Bank of India:
• It is India's Central Bank and regulatory body responsible for regulating of the Indian banking system.
• It is under the ownership of the Ministry of Finance, Government of India.
• It is responsible for the control, issue and maintenance of supply of the Indian rupee.
• It also manages the country's main payment systems and works to promote its economic development.
• Bharatiya Reserve Bank Note Mudran (BRBNM) is a specialised division of RBI through which it prints and mints Indian currency notes (INR) in two of its currency printing presses located in Nashik and Dewas.
• RBI established the National Payments Corporation of India to regulate the payment and settlement systems in India.
• Deposit Insurance and Credit Guarantee Corporation was established by RBI to provide insurance of deposits and guarantee credit facilities to all Indian banks.

(iii) Insolvency and Bankruptcy Board of India:
• It is the regulator for overseeing insolvency proceedings and entities like Insolvency Professional Agencies (IPA), Insolvency Professionals (IP), and Information Utilities (IU) in India.
• It was established on 1 October 2016 and given statutory powers through the Insolvency and Bankruptcy Code, passed by Lok Sabha on 5 May 2016.
• It covers Individuals, Companies, LLPs and Partnership firms. The new code speeds up the resolution of stressed assets.
• It simplifies insolvency and bankruptcy proceedings and handles cases through NCLT (National Company Law Tribunal) and Debt Recovery Tribunal.

Q2: Explain the types of laws in the Indian Legal System, considering the Indian Regulatory Framework.
Marks: 6

Answer: The laws in the Indian legal system could be broadly classified as follows: 

Criminal Law: Criminal law is concerned with laws about violations of the rule of law or public wrongs and punishment of the same. Criminal Law is governed under the Indian Penal Code, 1860, and the Code of Criminal Procedure, 1973 (Crpc). The Indian Penal Code, 1860, defines the crime, its nature, and punishments, whereas the Criminal Procedure Code, 1973, defines exhaustive procedure for executing the punishments of the crimes. Murder, rape, theft, fraud, cheating and assault are some examples of criminal offences under the law.

Civil Law: Matters of disputes between individuals or organisations are dealt with under Civil Law. Civil courts enforce the violation of certain rights and obligations through the institution of a civil suit. Civil law primarily focuses on dispute resolution rather than punishment. The act of process and the administration of civil law are governed by the Code of Civil Procedure, 1908 (CPC). Civil law can be further classified into Law of Contract, Family Law, Property Law, and Law of Tort. Some examples of civil offences are breach of contract, non-delivery of goods, non-payment of dues to lender or seller, defamation, breach of contract, and disputes between landlord and tenant. 

Common Law: A judicial precedent or case law is common law. A judgment delivered by the Supreme Court will be binding upon the courts within the territory of India under Article 141 of the Indian Constitution. The doctrine of Stare Decisis is the principle supporting common law. It is a Latin phrase that means “to stand by that which is decided.” The doctrine of Stare Decisis reinforces the obligation of courts to follow the same principle or judgment established by previous decisions while ruling a case where the facts are similar or “on all four legs” with the earlier decision. 

Principles of Natural Justice: Natural justice, often known as Jus Natural, deals with certain fundamental principles of justice going beyond written law. Nemo judex in causa sua (Literally meaning “No one should be made a judge in his own cause, and it’s a Rule against Prejudice”), audi alteram partem (Literally meaning “hear the other party or give the other party a fair hearing”), and reasoned decisions are the rules of Natural Justice. A judgment can override or alter the common law, but it cannot override or change the statute. 

Q3: What is the significance of the Supreme Court and High Court in the Indian judiciary?
Marks: 6

Answer: ​(i) Supreme Court:
The Supreme Court is the apex body of the judiciary. It was established on 26th January 1950. The Chief Justice of India is the highest authority appointed under Article 126. The principal bench of the Supreme Court consists of seven members including the Chief Justice of India. Presently, the number has increased to 34 including the Chief Justice due to increased cases and workload. An individual can seek relief in the Supreme Court by filing a writ petition under Article 32.

(ii) High Court:
The highest court of appeal in each state and union territory is the High Court. Article 214 of the Indian Constitution states that there must be a High Court in each state. The High Court has appellate, original, and supervisory jurisdiction. However, Article 227 limits its supervisory power. There are 25 High Courts in India. Six states share a High Court. Writs for fundamental rights violations can be filed under Article 226.

Q4: Write a short note on the following:

(i) Ministry of Corporate Affairs (MCA)
(ii) Ministry of Home Affairs
Marks: 6

Answer: (i) Ministry of Corporate Affairs (MCA):
MCA is an Indian Government Ministry which administers the Companies Act, 2013, Companies Act, 1956, the LLP Act, 2008, and the Insolvency and Bankruptcy Code, 2016. It regulates Indian enterprises in industrial and services sectors. Run by ICLS officers selected through UPSC. The highest post, DGCoA, is fixed at the Apex Scale.

(ii) Ministry of Home Affairs:
It is the interior ministry responsible for internal security and domestic policy. Headed by Union Minister of Home Affairs.

Q5: What do you understand by Law? Also, elaborate on the procedure for making a law.
Marks: 6

Answer: ​Meaning of Law: Law is a set of obligations and duties imposed by the government for securing welfare and providing justice to society. India’s legal framework reflects the social, political, economic, and cultural aspects of the country.

The Process of Making a Law:
• When proposed in parliament, a law is called a Bill.
• It is passed in Lok Sabha after discussion and debate.
• Then passed in Rajya Sabha.
• Assent of the President is obtained.
• It is notified by the Government in the Official Gazette of India.
• Becomes applicable from the date mentioned in the notification.
• Once notified and effective, it is called an Act of Parliament.

Q6: What is the structure of the Indian Judicial System, and what is the hierarchy of courts in India?
Marks: 6

Answer: When there is a dispute between citizens or between citizens and the Government, it is resolved by the judiciary.

Functions of the Judiciary:
• Regulation of interpretation of Acts and Codes
• Dispute Resolution
• Promotion of fairness

Hierarchy of Courts:
(i) Supreme Court: Apex body of the judiciary. The Chief Justice of India is the highest authority under Article 126. The principal bench consists of seven members, including the CJI.
(ii) High Court: The Highest court of appeal in each state. Article 214 mandates a High Court in every state. Has appellate, original and supervisory jurisdiction (limited by Article 227).
(iii) District Court: Below High Courts. Civil law matters are handled by a District Judge. Criminal matters are handled by the Sessions Court. The pecuniary jurisdiction limit is ₹2 crore.
(iv) Metropolitan Courts: For metropolitan cities with a population above 10 lakh. Chief Metropolitan Magistrate and Metropolitan Magistrates function under this